Can a Retention Bonus Be Deducted Monthly and Paid at Year-End? Let's Discuss!

Hi Friends, I just want to know, can a retention bonus become a part of monthly deductions from the gross salary? Then the complete deducted amount will be payable at the year-end.

Thanks,
Smita

Understanding Retention Bonuses

The very purpose of a retention bonus is to pay a lump sum amount at the end of a specified period, say 1 or 2 years, in order to retain the talent pool. Deducting monthly and paying at the year-end does not sound well.

Retention Bonus and Monthly Salary Deductions

A retention bonus cannot be deducted from the monthly salary and paid later. It is additional remuneration paid to the employee for their continuous service in the company, recognizing their long service.

The retention bonus amount will vary according to the period of stay by the employee, and it will increase as per their period of service in the company.

Dear Friends, thank you for this valuable information. Here, I would like to have your guidelines on the following issue. We are dealing with a separate case involving one of our employees. We will be deducting a portion of his salary every month and will pay it to him at the end of the year based on his performance. The deducted amount per month will be from his gross salary. I am a bit confused about which category we should show this deduction under.

Thanks & regards,
Smita